Can Poverty Be Measured?

Official national poverty data have long been calculated using a single dimension: income. At best, income statistics provide only a hazy picture of the actual conditions facing the hungry, the homeless, the unemployed, and the underemployed.

The Human Needs Index (HNI) introduces a new, multidimensional way to measure poverty and its effects. The key lies in the street-level knowledge of The Salvation Army, one of the country’s largest nonprofits delivering a safety net of services to those in need.

Published quarterly and developed from data amassed since 2004, the HNI provides the clearest illumination yet of trends in poverty and vulnerability. It is a critical new tool for policy makers, social services providers, and researchers. Sign up for email updates.

Interactive Timeline

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The national measure of the Human Needs Index seen across time from 2004 through the first quarter of 2015.

The measures included in the Human Needs Index. These are the total services provided for each measure since 2004.

National Map

The average measure of the Human Needs Index in each state over the past decade. States with higher need are indicated with deeper shades of red.


HNI Overview

The Human Needs Index (HNI) was developed in a unique collaboration between the Indiana University Lilly Family School of Philanthropy and The Salvation Army. It provides an analysis of The Salvation Army’s rich, enduring, and consistent collection of service data to expand the pathways through which individuals and communities in poverty may be identified. When combined with an assessment of governmental data, the HNI provides a new lens through which to understand human need across the U.S.

Unlike other traditional measures of poverty, the HNI comprises indicators that represent need substantiated on consumption rather than income. Thus, the HNI’s greatest strength is that it illustrates a more intimate portrayal of need than any other index.

Another important contribution of the HNI is that it provides a reliable instrument for measuring human need in near real time, and for tracking trends over time.

The advantage of this approach is that it provides critical observations informing the work of nonprofit organizations and public policymakers in reducing poverty.
 

Insights and Analysis

Those Doing the Most Goodsm Have the Most Data Points

In addition to community outreach and support, The Salvation Army collects high-quality data on poverty-related social services provided in thousands of communities. It answers the call for increasingly accessible and rigorous data from nonprofit organizations to better illuminate trends in poverty over time. 

The Human Needs Index – a Seven-Fold Picture

To provide a pathway through which the actual conditions of communities and individuals in poverty can be improved, the HNI analyzes seven indicator variables identifying the following kinds of assistance:

  • Meals
  • Groceries
  • Housing (mortgage and rent payment)
  • Clothing
  • Furniture
  • Medical bills and prescriptions
  • Energy bills

The result is a comprehensive measure and score of need that can track changes in need-based demand month by month. These two advantages – specificity and immediacy – set the HNI apart from other measures.

Tracking the Trend Lines

The HNI measures need in the United States since 2004, suggesting ways public policy and social services can be used in the future to more precisely target human needs in an ever-changing society and economy.

National Perspective

The national HNI scores represent the degree of poverty-related need for the U.S. as a whole.

The scale of the HNI begins at 0 indicating a minimum level of need. Its lowest point was in 2004 (1.8). The HNI reached its highest level in 2012 (3.0) and began to trend downward in 2013 (2.6) and 2014 (2.0) before an increase of need in 2015 (2.3).

Regional Perspective

Regional HNI scores over time suggest unique patterns based on geographical location, which are likely the result of the Great Recession and the length of recovery time needed in different states. In addition, regional HNI scores appear to be sensitive to disasters – like hurricanes, tornadoes, and snowstorms – that are geographically endemic but that often also traverse regional boundaries. States that have not returned to pre-Recession levels are: Indiana, Kansas, Michigan, Minnesota, Nevada and Pennsylvania. 

What the HNI reveals about the impact of the Great Recession

National HNI scores reveal a pattern that mirrors the economic volatility in the U.S. during the Great Recession. The Great Recession exerted a powerful impact on unemployment rates, personal income, and wealth, as well as the housing market in the U.S. The national HNI scores reflect this reduced economic activity as demonstrated by the lowest HNI scores occurring during the pre-Great Recession period (2004-2007), moderate scores appearing in the midst of the Great Recession (2008-2009), and the highest scores represented during the immediate post-Great Recession era (2010-2013). It is not surprising that the first substantial increase in HNI scores – a representation of increased need – is witnessed in 2010, the year immediately following the end of the Great Recession. This lag in demonstrated need is likely attributed to the depth of the recession and economic insecurity that individuals and households experienced – a result of this profound economic downturn and weak recovery.

The greatest increases in need from 2009 to 2010 are seen in specific components of the HNI, including medical assistance that increased by 36 percent, housing assistance that increased by 22 percent, and furniture assistance that increased by 128 percent. The variability of these indicators over time suggests that economic and financial shocks, including long-term unemployment, inability to pay mortgages or rent, and the loss of employer-sponsored health insurance may require a longer period of recovery. In addition, many individuals who faced job loss may have also experienced reduced access to credit, including home equity, which they might have used to maintain their food security during bouts of unemployment.

The HNI reveals that 2012 reflected a high point of need, with an annual score of 3.0. That was followed by two consecutive years of decreases (2.6 and 2.0). However, 2015 saw a reversal of this trend, with a 15% increase and a score of 2.3.

How disasters impact the HNI

An important factor to consider when comparing national HNI scores over time is the effect of disasters. While these events are geographically specific, their impact is reflected in the national HNI score, as the elevation of specific poverty-related indicators are associated with services provided during and after disasters, therefore affecting the fluctuation of national HNI scores.

For example, when the national HNI score increased in 2008, the meal assistance indicator also reached its peak to the highest score among all other indicators. The increase in meal assistance is likely due to the Super Tuesday tornado outbreak of February 5-6, 2008, which included 87 tornados across nine states. Alabama, Arkansas, Kentucky, and Tennessee were among the hardest-hit states.

In 2012, the national HNI reached its decade-high score. A plausible explanation for this acute increase is the last few days of October 2012, when the eastern United States experienced Hurricane Sandy, which left thousands of people homeless and millions without electricity. Consequently, reflecting these trends, the three greatest demands for assistance during this time were for furniture, witnessing a 104 percent increase; housing, realizing a 15 percent increase; and clothing, which increased by 25 percent from 2011.

Disasters may have contributed to spikes in need in 2015, with flooding in South Carolina (+100%), tornadoes in Arkansas (+182%), severe winter weather in Alabama (+127%) and both floods and fires in Colorado (+104%).

How seasonality impacts the HNI

When monthly HNI scores are viewed, trends suggest that seasonality may be an important factor in anticipating human need. For example, in the 2013-14 winter season, HNI scores began to climb in November; December is markedly the highest score. Scores began to decrease in January and February, which represents the lowest score that season. Scores briefly increased again in March. As demonstrated in this example, the overall trend across years (and regions) illustrates poverty-related need increases late in the calendar year. This increase in need at the end of the year is further demonstrated by the rise in the use of the Supplemental Nutrition Assistance Program (SNAP) benefit, while unmet need is also prominent as evidenced by The Salvation Army’s referral data.

Methodology

The Human Needs Index (HNI) was developed through a rigorous methodology with the goal of informing nonprofit leaders and policymakers about the degree of poverty-related need and measuring the effectiveness of response to need, over time, in specific communities and across the country. To achieve this goal, a standardized index was constructed.

Constructing the HNI was an iterative process that employed empirical evidence, statistical methodologies, and expert consultation. We began this process by developing a conceptual framework for analyzing poverty by identifying appropriate line-item service variables that represented essential basic needs. The selection of variables was based on careful consideration of the academic literature and theoretical constructs associated with measuring poverty and human needs. Overall, we tested more than 450 combinations of 230 organizational service variables to create the HNI – at the national, regional, and state level. We initially selected 21 material assistance and personalized service variables representative of basic human need – that is, the delivery of food, clothing, shelter, or health/well-being services.

Initial tests of these variables were conducted at the national level and by year, although subsequently, data were disaggregated to test variables at the service center site, county, state and territorial levels, and by month. In testing the variables’ ability to measure human need, we relied on external governmental measures of poverty, including the poverty rate, unemployment rate, and the Supplemental Nutrition Assistance Program (SNAP) benefit usage. The statistically significant associations demonstrated with these government measures provided guidance in selecting which variables to include in preliminary modeling.

Next, the 30-member team of statisticians, program officers, economists, and National Advisory Board members from The Salvation Army and Indiana University Lilly Family School of Philanthropy engaged in detailed discussions about which variables dedicated to food, clothing, shelter, or health/well-being services were collected in all states and across all four regions during each year. As a result, three variables (Meals Provided, Clothing Provided, and Lodgings Provided) were initially selected for preliminary testing against the external government measures, individually and together as a test model. The results revealed positive and significant correlations. Thus, additional variables representing these basic needs were added for further model testing.

In the final iterations of creating the HNI, using the governmental measures as benchmark validation and the 21 material assistance and personalized service variables representative of basic human need, we employed three approaches to weighting variables to determine appropriateness for inclusion or exclusion in the final national and state-level models. The most parsimonious model included three variables representing food, shelter, and health/well-being services. The weighting for this model was based on the geometric mean of the included variables. The second technique was the most analytical and pragmatic, in that it used both theoretical and empirical justifications for the weighting and selection of variables. The initial testing of this approach included five variables representing food, shelter, clothing, and health/well-being services. The third and final approach was also an analytic model that included all 21 variables. This process concluded with the presentation of the six strongest models derived from these distinctive approaches.

Ultimately, the second approach using Principal Components Analysis (PCA) was used to build the HNI because it allowed for both intuitive variable selection as well as statistical confirmation of individual variables’ utility in the overall model measuring human need. Subsequently, to ensure the strongest, most appropriate model was selected, further discussions about, and statistical testing of, the second approach were conducted. This concluding phase testing necessitated the retention of four variables, the removal of one variable, and the addition of three variables. The final model, therefore, includes seven (7) line-item variables and demonstrates strong correlations with benchmark data. Another important strength of the final model used to construct the HNI is that it is built from variables representing essential aspects of human need that are measured by The Salvation Army consistently across time and region.

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FAQ

The Human Needs Index (HNI) is believed to be the first multidimensional measure of poverty in the United States from the nonprofit perspective. The high-quality, monthly data from The Salvation Army goes back to 2004 and illuminates trends in poverty and vulnerability.
The HNI offers a critical new tool for policy makers, social services providers, and researchers to more quickly and accurately understand trends in need. It can help better understand what is likely to happen and at what time, with data that could also suggest patterns of vulnerability in the economic climate or to unanticipated disasters – information that is critical in creating targeted efforts to alleviate poverty.
The Salvation Army operates more than 7,500 centers in communities across the U.S. and collects high-quality data on a wide variety of poverty-related social services it provides. It is unique in its geographic reach and comprehensive coverage of basic human needs. The data collected afford a unique opportunity to address the call for increasingly more accessible and more rigorous data from nonprofit organizations to better illuminate trends in poverty over time.
Each Salvation Army center across the U.S. collects data related to the services it provides within that community. In creating the HNI, Lilly School researchers spent more than a year reviewing 230 kinds of data from The Salvation Army and ultimately selected the seven that 1) were most representative of the basic needs people have for survival (related to food, shelter, clothing), and 2) were validated when compared with established governmental measures like the poverty and unemployment rates, and SNAP benefits.
The HNI is a measurement of need based on the services provided by local branches of The Salvation Army. However, there are greater discrepancies between services provided and the actual level of need in a given community than at higher levels of aggregation; therefore, the greatest level of geographical detail the HNI can reliably measure is at the state level. While the HNI will be reflective of a general need in your area, there may be specifics within your community that cause it to diverge from the overall level of need of your state.
In constructing the HNI, four key components were identified that, taken together, allow us to measure dimensions of human need in a given geographic area:
  • Food Security
  • Clothing Assistance
  • Health/Well-Being Services
  • Housing/Shelter Assistance
The selection of variables was based on careful consideration of the academic literature and theoretical constructs associated with measuring poverty and human needs. Overall, we tested more than 450 combinations of more than 230 organizational service variables to create the HNI – at the national, regional, and state level. The final seven indicator variables selected to include in the HNI are listed and described in the table below:

HNI Indicator HNI Indicator Description
Meals Provided All meals provided, whether purchased from another source or served through a Salvation Army facility
Groceries Provided Groceries provided by voucher or distributed through a food pantry or food bank
Housing Assistance The number of rent/mortgage assistance payments to establish and/or maintain an individual/family in their own home
Clothing Provided The number of clothing orders provided
Furniture Provided The number of furniture orders provided
Medical Assistance The number of medical orders provided (i.e., prescriptions) and the number of volunteers/hours served
Energy Assistance The number of energy assistance orders provided and the number of volunteers/hours served
Comparing the values of the Human Needs Index is relatively simple. The scale begins at 0 – this indicates a minimum level of need. When comparing state values, the values can be compared either across states or across time. In other words, if Illinois has a need of 2 in May but a need of 3 in September, it is a clear increase in the need level in that state. Likewise, if Illinois has a need of 2 in May while Nebraska has a need of 1 in May, then Illinois has the higher need at that moment. Creating an index allows us to spot trends in the data that may not have been obvious from other measurements of need or poverty at the time.
The HNI is a unique measure of poverty. “Best” obviously depends on context – if you are writing about the job market, the unemployment rate is much more directly relevant, for instance. What the HNI delivers is a timely measurement based on goods and services provided to individuals and communities in need. What the HNI is not, then, is an index that is volatile to arbitrary cut-offs (like the unemployment rate, which drops if people are no longer considered to be in the work force due to being without work for too long), or to sample-response rates, nor is it an index whose scores only come out two years after the fact. Each month’s HNI value is a composite of thousands and thousands of services individually recorded, each given out to a person or place in need.
The U.S. Office of Management and Budget defines and measures poverty at the individual, family, and household level. This measurement has a profound impact on how effectively government and nonprofit organizations meet the needs of the poor. Poverty is determined by using “a set of money income thresholds that vary by family size and composition to determine who is in poverty… The official poverty definition relies on monetary income before taxes and does not include capital gains or noncash benefits (such as public housing, Medicaid, and food stamps).” (http://www.census.gov/hhes/www/poverty/about/overview/measure.html).

Human needs are goods or services that are essential for survival. There are many potential types of needs. The HNI specifically includes seven of the most basic needs for survival, which are all met by The Salvation Army: meals provided, groceries, housing, clothing, furniture assistance, health/medical care, and energy assistance.
Yes. The HNI is calculated using variables adjusted on a per-capita basis, so that states can be compared with each other regardless of their populations.
The same measures were used for all of the years included in the HNI. So, yes, HNI scores for different time periods can be compared with each other. Along with adjusting for relative populations, adjusting on a per-capita basis also allows for population growth to be accounted for within the HNI.
The national HNI and state HNIs were calculated separately and are scaled independently of each other. While the values themselves cannot be compared, the direction and magnitude of the trend lines are comparable: for this reason, the Y axis on left side of the timeline refers to the national HNI scale, and the Y axis on the right refers to the state HNI scale. The HNI value for different states can be compared to each other. Likewise, HNI scores for the same state can be compared across time.
The HNI will be updated quarterly with the most recently available monthly data from The Salvation Army.
Please use the following citation for the HNI: The Human Needs Index, researched and prepared by the Indiana University Lilly Family School of Philanthropy using data from The Salvation Army. Available online at www.HumanNeedsIndex.org.

About The Salvation Army

The Salvation Army has been supporting those in need in His name without discrimination for more than 130 years in the United States. Approximately 30 million Americans receive assistance from The Salvation Army each year through a range of social services: food for the hungry, relief for disaster victims, assistance for the disabled, outreach to the elderly and ill, clothing and shelter to the homeless, and opportunities for underprivileged children. Eighty-two (82) cents of every dollar The Salvation Army spends is used to support those services in 5,000 communities nationwide. For more information, go to salvationarmyusa.org. Follow us on Twitter @SalvationArmyUS and on Facebook.

About The indiana University Lilly Family School of Philanthropy

The Indiana University Lilly Family School of Philanthropy is dedicated to improving philanthropy to improve the world by training and empowering students and professionals to be innovators and leaders who create positive and lasting change. The school offers a comprehensive approach to philanthropy through its academic, research and international programs and through The Fund Raising School, Lake Institute on Faith & Giving, and the Women’s Philanthropy Institute. Learn more. Follow us on Twitter @IUPhilanthropy or “Like” us on Facebook.

Contact Us

Jennifer Byrd, Director of Communications
The Salvation Army National Headquarters
Phone: 703-519-5890
Jennifer_Byrd@usn.salvationarmy.org

Adriene Davis Kalugyer, Manager of Public Affairs
Indiana University Lilly Family School of Philanthropy
Phone: 317-278-8972
adrldavi@iupui.edu